Gold prices retreated from a 14-month peak on Monday after an agreement between the United States and Mexico to avert a tariff war crimped safe-haven demand for the yellow metal.
Spot gold was down 0.7% at $1,330.46 per ounce, as of 0249 GMT. In the previous session, the bullion hit its highest since April 19, 2018 at $1,348.08 an ounce.
U.S. gold futures fell 0.9% to $1333.70 an ounce.
"Talks between the U.S. and Mexico seem to have smoothened out already and the (gold) market seems to have lost its safe-haven appeal a little bit," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
"However, hopes that the U.S. Federal Reserve will reduce the interest rate is still looking a little positive for gold."
The United States and Mexico struck a deal on Friday to avert a tariff war, with Mexico agreeing to rapidly expand a controversial asylum programme and deploy security forces to stem the flow of illegal Central American migrants.
U.S. President Donald Trump also defended the deal with Mexico against criticism that there were no major new commitments to stem a flow of Central American migrants crossing into the United States, and said on Sunday more details would soon be released.
U.S. stock futures and Asian shares rose on Monday after the United States dropped its threat to impose tariffs on Mexico in a deal to combat illegal migration from Central America, and as weak U.S. jobs data raised hopes for U.S. interest rate cuts.
Investors will now look for any developments in Sino-U.S. trade, with a protracted spat between the two countries keeping market optimism under wraps.
On Saturday, the chief editor of China's Global Times newspaper said China is preparing to curb some technology exports to their trade adversaries, thawing hopes of a Mexico-like settlement to the Sino-U.S. trade war.
China's trade surplus with the United States, which has been a major sticking point with Washington, rose to $26.89 billion in May, from $21.01 billion in April, customs data showed on Monday.
Also cushioning gold's losses were increasing bets of a U.S. Federal Reserve rate cut, as trade tensions and soft economic data from the country cast a cloud on global economic outlook.
Fed fund futures now price in more than two 25-basis point rate cuts by the end of this year, with one almost fully priced in by July.
Lower interest rates increase the opportunity cost of holding gold.
Speculators have also raised their net long positions in COMEX gold in the week ended June 4, data from the U.S. Commodity Futures Trading Commission (CFTC) showed on Friday.
Elsewhere, silver shed 1.1% to $14.82 per ounce, while platinum dipped 0.5% to $802.50 an ounce.
Palladium was unchanged at $1,357.53 an ounce.